Catalytic finance: When does it work?

Stephen Morris; Hyun Song Shin

doi:10.1016/j.jinteco.2005.06.014

Catalytic finance: When does it work?

Stephen Morris
, Hyun Song Shin

Research output: Contribution to journal › Article › peer-review

88 Scopus citations

Abstract

In a model of debt crisis caused partly by creditor coordination failure, we show that bailouts that reduce ex post inefficiency will sometimes enhance the incentives for governments to take costly adjustment effort. This model helps us understand a debate about the role of the IMF in catalyzing lending to developing countries.

Original language	English (US)
Pages (from-to)	161-177
Number of pages	17
Journal	Journal of International Economics
Volume	70
Issue number	1
DOIs	https://doi.org/10.1016/j.jinteco.2005.06.014
State	Published - Sep 2006

All Science Journal Classification (ASJC) codes

Finance
Economics and Econometrics

Keywords

Catalytic finance
Debtor adjustment
IMF
Moral hazard
Sovereign debt

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10.1016/j.jinteco.2005.06.014

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title = "Catalytic finance: When does it work?",

abstract = "In a model of debt crisis caused partly by creditor coordination failure, we show that bailouts that reduce ex post inefficiency will sometimes enhance the incentives for governments to take costly adjustment effort. This model helps us understand a debate about the role of the IMF in catalyzing lending to developing countries.",

keywords = "Catalytic finance, Debtor adjustment, IMF, Moral hazard, Sovereign debt",

author = "Stephen Morris and Shin, \{Hyun Song\}",

note = "Funding Information: We thank the co-editor Eric van Wincoop and two anonymous referees for their guidance. We also thank Andy Haldane, Catherine Hovaguimian, Silvia Marchesi, Adrian Penalver, and Vicky Saporta for comments on earlier drafts. We have gained from feedback from participants at the UT Austin/Dallas Fed conference “Sovereign Debt in the 21st Century”, and seminar participants at the IMF, New York Fed and Bank of England. Morris gratefully acknowledges many valuable conversations while a visitor at the IMF research department in March 2002. Shin acknowledges support from the U.K. ESRC under grant 156-25-0026. The views expressed are those of the authors alone.",

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KW - Debtor adjustment

KW - IMF

KW - Moral hazard

KW - Sovereign debt

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JO - Journal of International Economics

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IS - 1

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Catalytic finance: When does it work?

Abstract

All Science Journal Classification (ASJC) codes

Keywords

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